Slack Announces $600 Million Bond Sale

Slack Announces $600 Million Bond Sale

almost 4 years ago2 mins

Canadian workplace messenger Slack on Monday notified the #investor channel of its intention to sell $600 million of bonds with a difference – hot on the heels of cash-strapped cruise operator Carnival 🛳

What does this mean?

Slack’s issuing new “convertible” bonds – due for repayment in 2025 but which, under certain as-yet unspecified conditions, investors can instead swap before then for a combination of cash and Slack stock.

The sale – only open to a select few large “institutional” buyers – may reflect Slack’s need for cash as the loss-making chat company struggles with stiff competition. Crucially, Slack reserves the right to buy the bonds back at face value if its share price rises to 130% of a preset level from 2023 on – potentially making this a relatively cheap way to raise money 😏

Selling bonds causes existing investors less alarm than selling extra shares. But one flailing firm did both last week – and its stock price tumbled over 30%. Cruise line Carnival, owner of the infamous Diamond Princess, is seeing its market-leading trade in “floating Petri dishes” hammered by the coronavirus fallout. It sold $4 billion of normal bonds and nearly $2 billion of convertibles on Wednesday, but the party fell flat when it came to Carnival’s riskier stock – lackluster demand led to it selling $500 million, less than half of what it had hoped.

Carnival has weathered storms before, but this cruise could be terminal (Source: CNBC/Kyle Walsh)
Carnival has weathered storms before, but this cruise could be terminal (Source: CNBC/Kyle Walsh)

Why should I care?

Slack’s shares missed out on some of the US market’s overall bounce on Monday, with signs that coronavirus’s grip on Europe is slackening perhaps suggesting its work-from-home tech might not be as heavily used for as long as thought. But videoconferencing company Zoom fared worse: its stock fell 6% as high investor expectations met reports of dangerously low data security.

Zoom (blue) remains up against both Slack (pink) and the US stock market (yellow) in 2020
Zoom (blue) remains up against both Slack (pink) and the US stock market (yellow) in 2020

As for Carnival, some investors still have faith. While it’s currently losing $1 billion a month, news broke on Monday that Saudi Arabia’s sovereign wealth fund has snapped up 8% of the company in recent weeks… 🤔

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG